This seems like a race-conditions sort of exploit: most of the time XP will be able to load the utility manager before the next utility manager request can come in (and therefore close the existing one before spawning another).
But if it's an especially slow or overworked server, I imagine several reqests for the utility manager could be made before the program is actually loaded, allowing the user to spawn processes endlessly.
I couldn't get this to work on my systems, and I wouldn't imagine that it works on most XP servers unless they're especially overworked.
Any other interpretations of the mechanics behind this exploit?